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Education Funds

You want your child to have the best chances at success in life, and a quality education plays a crucial role in your child's overall success! The only problem is that education is expensive, and the costs can add up quickly. Luckily there are a number of funds out there to help you cover the cost of education, as well as different ways to save up for future needs! We've put together a list of helpful resources to help you get started:

The “529 Plan”

A 529 Plan is a savings plan specifically designed to help families set aside funds for future education. They are operated either by the state or an educational institution, and studies have shown that parents who use a 529 plan are significantly more successful at saving than those who don’t. Additionally, there are three types of 529 plan for you to choose from:

  • 529 Savings Plan: This is similar to a 401(k) or a Roth IRA, and your financial contributions are invested into things like mutual funds. 

  • 529 Prepaid Tuition Plan: This plan allows you to pay the cost of in-state college tuition in advance. If your child decides to go to school out of state or to a private university, the money from that plan can be transferred. In some states, however, the full amount can’t be transferred, so look at the rules in your state before setting up your plan.

  • Private 529 Plan: This plan will allow you to pre-pay the cost of tuition for participating colleges or universities at today’s prices. This will be particularly useful considering the constantly rising costs of tuition.

Coverdell Education Savings Account (ESA)

This type of account allows parents to contribute up to $2,000 a year to the account, and that money will be used to cover the cost of future education. Additionally, the funds in the account can grow tax-free until they are withdrawn. If the funds in the account are used to cover the costs of college, their distribution will not be taxed either.

College savings with insurance

This option might be more appealing to parents who don’t want to use a 529 plan, as they are subject to market volatility to a certain degree. This setup combines a college savings plan with life insurance. The parent (or parents) sets aside a specific amount of money every year for a specified window of time, and during that time the parent receives life insurance coverage. The child can then use the money from that plan for college or to pursue other interests if they so choose.

American Opportunity Tax Credit

This tax credit, also referred to as the AOTC, applies to eligible students for the first four years of their higher education. You can receive a credit of up to $2,500 annually per student, and if the credit brings your taxes down to $0, you can have up to 40% of the remaining amount refunded to you.  

Military Scholarships

The Military Child Education Coalition provides educational resources for children of military families. Military families must relocate frequently, and this can cause significant disruption in the educational development of their children. The Military Child Education Coalition was created to help children of military families get the education they need in order to succeed in life, including a number of scholarships.

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